Question 1

The table below shows the price index for Zimbabwe starting in 2000.  Which of the following statements correctly describe the behavior of prices in Zimbabwe?
I. The cost of the CPI basket increased.
II. The inflation rate was 73.4 percent between 2000 and 2001.

Accepted Answer

A)  I only 
B)  II only 
C)  neither I nor II 
D)  both I and II

Question 2

In 2007, the CPI was 177.1 and in 2008 the CPI was 180.9. What was the inflation rate between these two years?

Accepted Answer

The answer of In 2007, the CPI was 177.1 and...

Question 3

A recession causes a decrease in the demand for housing, resulting in substantial layoffs in the construction industry. The people laid off are considered

Accepted Answer

A)  structurally unemployment. 
B)  seasonally unemployment. 
C)  cyclically unemployment. 
D)  frictionally unemployment.

Question 4

Nicholas does not possess marketable job skills; therefore, he is

Accepted Answer

A)  frictionally unemployed. 
B)  cyclically unemployed. 
C)  structurally unemployed. 
D)  seasonally unemployed.

Question 5

-The tables above give the purchases of an average consumer in a small economy. (These consumers purchase on shampoo and pizza.) Suppose 2006 is the reference base period.
a) What is the cost of the CPI basket in 2006 and 2007?
b) What is the CPI in 2006 and in 2007?
c) What is the inflation rate between 2006 and 2007?

Accepted Answer

The answer of 
-The tables above give the purchases of...

Question 6

Suppose that last year the Consumer Price Index was 124; this year it is 130.7. What was the inflation rate between these years?

Accepted Answer

A)  30.7 percent 
B)  5.1 percent 
C)  5.4 percent 
D)  6.7 percent

Question 7

Discouraged workers are

Accepted Answer

A)  considered unemployed because they are still in the labor force. 
B)  considered unemployed because they are not working. 
C)  not considered unemployed because they are not actively seeking work. 
D)  not considered unemployed because they are not qualified to work.

Question 8

-The labor force participation rate is

Accepted Answer

A)  95.7 percent. 
B)  67.1 percent. 
C)  56 percent. 
D)  64.0 percent.

Question 9

If the inflation rate is negative, the price level in an economy is

Accepted Answer

A)  constant. 
B)  falling. 
C)  rising slowly. 
D)  rising rapidly.

Question 10

Aggregate hours has an upward trend over the last 30 years.

Accepted Answer

A) True 
 B)False

Question 11

"People don't have any money to spend on cool gadgets," stated an analyst reporting on the technology industry in 2008. He expected Silicon Valley (where many technology- based firms are located) to shed up to 10% of its workforce as a result of poor sales and declining profits for those fir For example, advanced Micro Devices planned to lay off 3% of its workforce while Applied Materia planned to cut its staff by 12%.
These job losses in the technology industry are an example of unemployment.

Accepted Answer

A)  frictional 
B)  cyclical 
C)  structural 
D)  both frictional and structural

Question 12

If the CPI is 120, this means that

Accepted Answer

A)  the inflation rate must be positive. 
B)  prices are 0.12 times higher than in the reference base period. 
C)  prices are 20 percent higher than in the reference base period. 
D)  prices are 120 percent higher than in the reference base period.

Question 13

Why is unemployment a problem?

Accepted Answer

The answer of Why is unemployment a problem?...

Question 14

If the population is 300 million, with 70 million under the age of 16 and institutionalized, another 70 million not in the labor force, 10 million unemployed and 150 million employed, the labor force participation rate is

Accepted Answer

A)  6.67 percent. 
B)  50 percent. 
C)  69.6 percent. 
D)  23.3 percent.

Question 15

Give an example of a cyclically unemployed person.

Accepted Answer

The answer of Give an example of a cyclically unemployed...

Question 16

Cyclical unemployment is the result of

Accepted Answer

A)  the business cycle. 
B)  technological change or foreign competition. 
C)  normal labor market turnover. 
D)  irresponsible workers with poor work habits.

Question 17

Assume the inflation rate falls from 4 percent to 2 percent. This means that

Accepted Answer

A)  the price level is increasing more slowly. 
B)  the economy is experiencing deflation. 
C)  the price level has fallen. 
D)  real GDP is decreasing.

Question 18

If the number of people unemployed is 100, the number of people employed is 1000, and the working- age population is 1400, then the labor force participation rate is

Accepted Answer

A)  78.6 percent. 
B)  66.6 percent. 
C)  71.4 percent. 
D)  64.3 percent.

Question 19

The natural unemployment rate is the unemployment rate that exists when there is no

Accepted Answer

A)  cyclical or structural unemployment. 
B)  structural unemployment. 
C)  frictional unemployment. 
D)  cyclical unemployment.

Question 20

If this year's price level is 126 and last year's price level was 120, the inflation rate is .

Accepted Answer

A)  6 percent a year 
B)  0.95 percent a year 
C)  5 percent a year 
D)  1.05 percent a year

Exam 5: Monitoring Jobs and Inflation

The table below shows the price index for Zimbabwe starting in 2000. Which of the following statements correctly describe the behavior of prices in Zimbabwe? I. The cost of the CPI basket increased. II. The inflation rate was 73.4 percent between 2000 and 2001.